|Square gets conditional approval for industrial loan charter |
Published: March 18, 2020 at 5:09 p.m. ET
By Emily Bary
Square Inc. SQ, -11.69% announced late Wednesday that it had received conditional approval from the Federal Deposit Insurance Corporation to conduct deposit insurance related to an Industrial Loan Company (ILC) banking charter. The company also received approval from the Utah Department of Financial Institutions for this purpose. The approval grants Square the ability to operate a bank, Square Financial Services, that will be an independent direct subsidiary of the company. Its main objective will be to provide small-business loans for Square's Capital lending business and to offer deposit products. The bank is expected to launch in 2021. The company expects that Square Financial Services will sell loans to third-party investors, which will limit the exposure of these activities on Square's balance sheet. The stock was up 1% in after-hours trading Wednesday after falling 11.7% in regular trading. The shares have dropped 52% over the past month compared with a 29% decline for the S&P 500 SPX, -5.18% over that span.